On July 8, 1932, the Dow Jones Industrial Average fell to its lowest point during the Great Depression.
This event was symptomatic of a decade of economic uncertainty that was precipitated by the crash in the fall of 1929, when U.S. stock prices declined dramatically. The resulting panic devastated the fortunes of many investors and caused major declines in consumption, industrial production, and employment, which in turn affected the U.S. and world economy for the next ten years.
The U.S. stock market had expanded rapidly during the 1920s, attracting many inexperienced investors. George Mehales, a Greek immigrant who owned a diner in Spartanburg, South Carolina, began investing in the stock market just before the crash. “One day,” he recalled in a Federal Writers’ Project interview:
…one of my customers showed me how much money he was making in the market…It looked good to me, and I bit with what you folks call ‘hook, line and sinker.’…The first day of October in 1929 made me feel like I was rich…During the last days of October, my stocks began to drop. I was gambling on the margin. My brother called me and told me I would have to put up more cash. I went to the bank and put up all the cash I had in the bank with my brother…. I had about five thousand dollars invested. On that day of October 29, they told me I needed more cash to cover up. I couldn’t get it. I was wiped out that day…
“George Mehales.” R. V. Williams, interviewer; Spartanburg, South Carolina, December 1938. American Life Histories: Manuscripts from the Federal Writers’ Project, 1936 to 1940. Manuscript Division.
Mehales had lost everything, including his restaurant, which he had to sell at a rock bottom price. “I was wiped…I considered killing myself, ’cause I had nothing left.”
After the Crash
In the early 1930s, the United States moved further into economic instability, with the collapse of many banks, dramatically reduced spending on consumer goods, and increasing unemployment.
President Herbert Hoover’s response to these crises disappointed many, including WWI veterans, many of whom found themselves impoverished. They rallied in Washington in 1932, hoping that they might be able to receive their military pension funds early. When Congress rejected their appeals, some members of this so-called, “Bonus Army” reacted with frustration and violence. U.S. Army troops were called in, and the image of U.S Army soldiers confronting the veterans of the Great War in the nation’s capital and virtually running them out of town did not sit well with the public.
The “Dust Bowl”
The United States’ industrial and financial centers were clearly affected by the economic downturn, but so was the nation’s agricultural core. The optimism of agricultural expansion in the 1920s gave way to despair in the Southern Great Plains, where the economy was devastated by bank failures, the drying up of credit, and extreme drought. In 1932, the barren soil was so dry that high winds created dust storms. “Black blizzards” of dirt moved across the region, obscuring the sun and settling in drifts. Unable to sustain themselves, some of the poorest farmers in Oklahoma, Texas, and southwestern Kansas abandoned their homes and farms in search of employment. The promise of a year-round growing season lured many of these so-called “Okies” to California. Eventually, the federal government organized migratory labor camps to assure dust bowl refugees decent living conditions.
The nation’s economy recovered over time, and historians continue to debate the origins of the recovery. Some credit the improvements to the influence of President Franklin D. Roosevelt’s New Deal initiatives—which attempted to stabilize the economy and encourage consumer confidence. These initiatives included the establishment of the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC), the Social Security Act of 1935, and the creation of job opportunities for the unemployed with work relief programs such as the Works Progress Administration. Others believe that the increased industrial production required by preparations for the United States’ entry into World War II fueled the recovery. Whatever the cause, it was clear that by the time that the United States entered World War II its economy had largely recovered.
Find out more about the period leading up to the crash of 1929 in the collection: Prosperity and Thrift: The Coolidge Era and the Consumer Economy, 1921-1929.
Explore the impact of the Great Depression on the lives of ordinary Americans through the work of writers, artists, ethnographers, actors, playwrights, and photographers employed in government work relief programs during the Depression.